Ladies and gentlemen... the hardware key. Also known as a lockout dongle, security key, or lockout key, the hardware key is connected to the PC via a serial, parallel, or USB connection. When the key-protected software is started, it looks for the key. If the key is found, the software starts. If not, you will be scolded with an error message and the software won't load.

The first software to ever use a security key was Wordcraft (a word processing program)in 1980. In general, software that utilizes security keys tends to be expensive (for example, older versions of Quark).

There are two types of key setups... the key-per-workstation setup, and the single server key setup. The key-per-workstation setup has a key for each workstation running the software, and on occasion a designated key connected to a central server. The single server key setup has one key that broadcasts across the network, and the software looks for the key on the server machine (the path to the key usually designated during setup).

Pros:

In theory, less easily circumvented than serial numbers or registration codes

The loss of a port to use the key (although some serial and parallel keys do have pass-throughs)

Increased support costs/customer frustration due to various communication problems between the key and the software

If the key is lost or broken... no software for you. You'll have to wait until a new key is given to you.

As a technician who has to deal with software that utilizes keys day in and day out, I have to say this... they are the devil. About half of our calls are customers upset because the multi-thousand dollar software that they purchased from us won't open due to key issues. The specific keys we use (the Rainbow Technologies SuperPro series) broadcast on a specific TCP Port that is almost always blocked by your average firewall software, won't run on Windows Server 2003, and tend to lose the license settings stored within.

Information on the first software to ever use a key gleaned from the "dongle" entry in Wikipedia. Hours of "Key? Y'mean the little purple dealie on the back of my modem?" calls are strictly from personal experience.